TIDMEXXI
RNS Number : 9912I
Energy XXI (Bermuda) Limited
01 August 2012
Energy XXI Provides Fiscal Year-End Reserves Estimates and
Operations Update
-- Preliminary proved reserves estimated at 120 MMBOE, 71% oil
-- Fiscal 2013 capital budget of $700 million approved
-- Drilling program continues to add reserves, production
-- Davy Jones flow test nearing
HOUSTON - July 31, 2012 - Energy XXI (NASDAQ: EXXI) (AIM: EXXI)
today provided estimates of its fiscal 2012 year-end reserves and
an operations update, including production and recent exploration
and development results.
Fiscal 2012 Year-end Reserves
Preliminary estimates of the company's June 30, 2012 fiscal
year-end proved reserves total 120 million barrels of oil
equivalent (MMBOE), up three percent from the June 30, 2011
year-end reserves, primarily due to successful drilling of the
company's core properties on the Gulf of Mexico shelf. Energy XXI
estimates it added 19 MMBOE of proved reserves primarily through
discoveries, extensions of existing fields and revisions, while
producing 16 MMBOE in fiscal 2012. The all-sources reserves
replacement rate was 119 percent. Netherland, Sewell &
Associates, Inc. (NSAI), independent oil and gas reserve auditors,
are currently finalizing the year-end reserves estimates. All of
the company's proved reserves are in the United States Gulf of
Mexico or Gulf Coast, approximately 68 percent are proved
developed, with approximately 71 percent being liquids, of which 94
percent is crude and condensate.
"Successful development drilling during fiscal 2012 drove
organic growth in reserves without an acquisition," Energy XXI
Chairman and CEO John Schiller said. "We produced a record 16
million barrels and still added meaningfully to our reserve base,
particularly considering oil represented virtually all of the net
increase in reserves, which lifted the total oil mix to 71 percent
from 66 percent the previous year."
Core Operations Update
Currently, the company is operating four rigs on the Gulf of
Mexico shelf. In the Main Pass complex, the company has
successfully drilled the Carinos and Don Tomas wells (WI 100%/ NRI
78%) targeting the BA-4AA sand. Carinos was drilled to 8,346 feet
true vertical depth (TVD) and encountered 88 net feet of pay. The
well initially tested 575 barrels per day (Bbl/d) gross of oil from
a low-resistivity section of the sand. The primary targeted upper
section of the BA-4AA sand will be added to the completion
following work at Don Tomas. The Don Tomas well was drilled to
8,292 feet TVD, encountering 195 net feet of pay within the
targeted BA-4AA sand, thicker and cleaner than was seen at Carinos,
which positively impacts reserves and anticipated production rates.
The zone was penetrated after June 30, 2012 and is not included in
the fiscal 2012 reserve numbers. Don Tomas is expected to be
completed and placed on production in August at an estimated gross
rate of 3,000 BOE/d. Additional development wells are scheduled at
Main Pass, with as many as seven additional wells in the program
this fiscal year.
At Grand Isle 16 (WI 100%/ NRI 87%), the Pi development well has
been drilled to 9,537 feet TVD. Initial logs indicate nearly 400
feet of net pay, primarily oil, in seven different sands. While the
primary target was the C-7 sand, pay was seen from the BF-2 to C-7
sands, far exceeding pre-drill net pay estimates. The well is being
completed and is expected to come online within the next two to
three weeks at 1,200 BOE/d gross. During fiscal 2012, the company
plans to drill as many as seven more development wells and begin a
multi-well re-completion program at Grand Isle.
The company's first horizontal well, Big Sky, has spud at West
Delta 73 field (WI 100%/ NRI 83%). A total of four to five
horizontal wells will be drilled at West Delta this fiscal year.
Based on historical results in this field, horizontal wells
increase ultimate recovery more than three-fold with only an
estimated 15 percent increase in cost relative to vertical wells.
The company will provide updates on the multiple-well horizontal
development at West Delta as the program progresses.
Production Update
During the company's fiscal fourth quarter, production peaked at
56,300 BOE/d. Production for the quarter averaged a record 47,600
BOE/d, up 13 percent from the year before even as tropical storm
Debby, rig moves and pipeline downtime negatively affected run
rates. "Reaching more than 56,000 BOE/d in mid-June was an
important milestone," Schiller said. "Current production
approximates 45,000 BOE/d, still affected by third party pipeline
maintenance and rig moves. With production from key wells coming
online within the next couple weeks could easily get back to record
production levels. We remain on track to average 58,000 to 62,000
BOE/d for fiscal year 2013, which would represent about 35 percent
year-over-year growth."
Shallow-Water Ultra-Deep Exploration and Development
In June 2012, 165 feet of Wilcox sands in the Davy Jones No.1
discovery well were successfully perforated with electric wireline
casing guns. Completion activities are continuing and a flow test
is expected in August with commercial production expected shortly
thereafter. Energy XXI holds a 15.8 percent working interest (12.6
percent net revenue interest) in the Davy Jones discovery well.
Total net investment in Davy Jones #1 through June 30, 2012 was
approximately $74 million.
At the Blackbeard West #2 exploration well on Ship Shoal Block
188, a liner was set after the well encountered a high-pressure gas
flow immediately below the salt weld in May 2012. The well is
currently drilling below 21,400 feet to evaluate objectives below
the salt weld. The well is targeting Miocene sands seen below the
salt weld approximately 13 miles east at Blackbeard East, with a
proposed total depth of 24,500 feet. Energy XXI holds a 22.9
percent working interest (17.5 percent net revenue interest) in the
prospect. Total net investment in Blackbeard West # 2 approximated
$16 million at June 30, 2012.
The Lineham Creek exploration prospect, located onshore in
Cameron Parish, Louisiana, is drilling below 20,100 feet towards a
proposed total depth of 29,000 feet, targeting Eocene and Paleocene
objectives below the salt weld. Chevron U.S.A Inc. is the operator
of the well. Energy XXI holds a 9 percent working interest in the
well with total net investment through June 30, 2012 of
approximately $8 million.
Central Gulf of Mexico Lease Sale
The company participated in the Gulf of Mexico lease sale held
June 20, 2012. Energy XXI was the sole bidder on a single lease,
South Timbalier 22. The lease is adjacent to the company's South
Timbalier 21 field.
McMoRan, operator of the ultra-deep exploration partnership, was
the apparent high bidder on 14 lease blocks on the Gulf of Mexico
shelf, with six of the 14 bids being made solely by McMoRan and the
remaining eight being submitted with Chevron U.S.A Inc. Energy XXI
expects to participate with its full 18 percent working interest on
the bids made solely by McMoRan and 9 percent working interest on
the bids made jointly with Chevron U.S.A. Inc.
Capital Expenditures
The company has received approval from its Board of Directors to
proceed with a capital expenditure budget of $700 million for
fiscal year 2013, which began July 1, 2012. Drilling, completion
and facilities account for $505 million of the total capital
budget, with $322 million going toward exploration and development
at the acquired ExxonMobil properties and $183 million allocated
toward the exploration and development of the legacy assets.
Approximately 85 percent of the overall capital budget will be
allocated to development of the company's assets.
Forward-Looking Statements
All statements included in this release relating to future
plans, projects, events or conditions and all other statements
other than statements of historical fact included in this release
are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements are
based upon current expectations and are subject to a number of
risks, uncertainties and assumptions, including changes in
long-term oil and gas prices or other market conditions affecting
the oil and gas industry, reservoir performance, the outcome of
commercial negotiations and changes in technical or operating
conditions, among others, that could cause actual results,
including project plans and related expenditures and resource
recoveries, to differ materially from those described in the
forward-looking statements. Energy XXI assumes no obligation and
expressly disclaims any duty to update the information contained
herein except as required by law.
Competent Person Disclosure
The technical information contained in this announcement
relating to operations adheres to the standard set by the Society
of Petroleum Engineers. Bobby Poirrier Jr., Vice President of
Corporate Development, a Petroleum Engineer, is the qualified
person who has reviewed and approved the technical information
contained in this announcement.
About the Company
Energy XXI is an independent oil and natural gas exploration and
production company whose growth strategy emphasizes acquisitions,
enhanced by its value-added organic drilling program. The company's
properties are located in the U.S. Gulf of Mexico waters and the
Gulf Coast onshore. Seymour Pierce is Energy XXI's listing broker
in the United Kingdom. To learn more, visit the Energy XXI website
at www.EnergyXXI.com.
GLOSSARY
Barrel - unit of measure for oil and petroleum products,
equivalent to 42 U.S. gallons.
BOE - barrels of oil equivalent, used to equate natural gas
volumes to liquid barrels at a general conversion rate of 6,000
cubic feet of gas per barrel.
BOE/d - barrels of oil equivalent per day.
MMcf/d - million cubic feet of gas per day.
Net Pay - cumulative hydrocarbon-bearing formations.
NRI, Net Revenue Interest - the percentage of production revenue
allocated to the working interest after first deducting proceeds
allocated to royalty and overriding interest.
TVD -total vertical depth of a well.
WI, Working Interest - the interest held in lands by virtue of a
lease, operating agreement, fee title or otherwise, under which the
owner of the interest is vested with the right to explore for,
develop, produce and own oil, gas or other minerals and bears the
proportional cost of such operations.
Workover / Recompletion - operations on a producing well to
restore or increase production. A workover or recompletion may be
performed to stimulate the well, remove sand or wax from the
wellbore, to mechanically repair the well, or for other
reasons.
Enquiries of the Company
Energy XXI
Stewart Lawrence
Vice President, Investor Relations and Communications
713-351-3006
slawrence@energyxxi.com
Greg Smith
Director, Investor Relations
713-351-3149
gsmith@energyxxi.com
Seymour Pierce
Nominated Adviser: Jonathan Wright
Corporate Broking: Richard Redmayne
Tel: +44 (0) 20 7107 8000
Pelham Bell Pottinger
James Henderson
jhenderson@pelhambellpottinger.co.uk
Mark Antelme
mantelme@pelhambellpottinger.co.uk
+44 (0) 20 7861 3232
This information is provided by RNS
The company news service from the London Stock Exchange
END
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